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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY S
Date of hearing : 23.03.2022 Date of Pronouncement : 25.03.2022 O R D E R Per Padmavathy S, Accountant Member
This appeal of the assessee is directed against the order of CIT(A) -7, Bengaluru passed for the asst. year 2013-14 by order dated 10/7/2018.
The assessee raised the following grounds before us.
1. The Order of the learned Commissioner passed under section 250 of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The Appellant denies itself liable to be assessed to tax on a total income as determined by the learned AG as against the total income as declared by the Appellant on the facts and circumstances of the case.
3. The Commissioner of Income Tax (Appeals) failed to appreciate that the Assessment Proceedings conducted by the learned Assessing Officer and consequent order of assessment is in violation of principles of natural justice and therefore not sustainable in law on the facts and circumstances of the case.
4. The Commissioner of income Tax (Appeals) failed to appreciate that the learned Assessing Officer having failed to issue the statutory notice under section 143(2) of the act, the proceedings are not sustainable on the facts and circumstances of the case.
5. The Commissioner of Income Tax (Appeals) failed to appreciate that the learned Assessing Officer having failed to dispose the objections filed by the Appellant on the issue of non- granting of sufficient time and conducting hearing at the fag- end of the year and on the issue of non-issue of statutory/mandatory notices, the proceedings are rendered bad in law for this reason also, on the facts and circumstances of the case.
6. The Commissioner of Income Tax (Appeals) failed to appreciate that the learned Assessing Officer having failed to send the order of assessment on or before the 31/03/2016, the order is rendered invalid and unsustainable in law on the facts and circumstances of the case.
7. The Commissioner of Income Tax (Appeals) is not justified in relying on the so- called tear-off acknowledgment whose authenticity the Appellant hereby questions, as the order of assessment was received by the Appellant through postal medium on 22/04/2016 and question of manual service does not arise on the facts and circumstances of the case.
Without prejudice, the learned AO failed to give 'l'DS credit available to the credit of the Appellant on the facts and circumstances of the case. 9. Without prejudice to the right to seek waiver with the Hon'ble Chief Commissioner of Income 'fax/Director General of Income Tax, the Appellant denies itself liable to be charged to interest under sections 234A, 23413 and 234C of the Act which under the facts and circumstances of the case deserves to be cancelled. The calculation of interest under sections 234A, 234B and 234C is not in accordance with law as the rate, amount and method for calculating interest is not discernible from the order of assessment. 10. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 11. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
During the course of hearing, the Ld.AR pressed only the grounds relating to non-issue of notice u/s 143(2) of the Income Tax Act (the Act) which is adjudicated in the following paragraphs.
The brief facts of the case are that the assessee is an individual and filed its return of income on 12/08/2013 declaring total income of Rs.13,38,560/-. The case was selected for scrutiny whereby the AO completed the asst. u/s 143(3) of the Act determining the total income of Rs.28,08,560/-. During the course of proceedings, the AO found that the assessee has shown rental income of Rs.15,04,500/- whereas the rental receipts from Form 26AS is Rs.36 lakhs. On being confronted by the AO, the assessee filed a letter on 30/03/2016 admitting the error on omission on her part and agreed for addition of the amount of Rs.21 lakhs to the income of the assessee for the year under consideration. Accordingly, the AO completed the asst. on 30/03/2016 and also initiated penalty proceedings u/s 271(1)(c) of the Act.
The assessee preferred an appeal before the CIT(A) challenging the validity of the asst. order passed by the AO contending that no notice u/s 143(2) was issued and no notice of hearing was ever issued prior to the notice issued for hearing on 28/03/2016. The assessee, therefore, contended that the principal of natural justice was violated and the assessment is bad in law. The assessee also submitted before the CIT(A) that these objections were raised before the AO and that the AO did not dispose of the objections. The CIT(A) dismissed the appeal of the assessee on the ground that (i) As per the system generated Audit trail, Notice u/s. 143(2) dated 03/09/2014 was issued to the assessee fixing the date of hearing on 12/09/2014. The very fact that the AR appeared before AO proves the fact that the notice issued by the AO have reached the assessee.
(ii) The AIR information on difference in rental receipts offered was brought to notice of AR the latter agreed for making addition of the same.
(iii) The Assessee was in knowledge of the proceedings and agreed for the additions which were pointed out based on the reasons for selection of case.
(iv) Reliance is placed on Supreme Court decision in CST V/s. Subash & Co (453 SCL 313, SC dtd 17/02/2003.). The emerging principles of said decision listed by CJT(A) are as under:
• "Non issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing offIcer, if otherwise reasonable opportunity of being heard has been given. • Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard. • If prejudice has been caused by non-issue or invalid service of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid, more so, if the assessee by his conduct has rendered service impracticable or impossible. In a given case when the principles of natural justice are stated to have been violated it is open to the Appellate Authority in appropriate cases to set aside the order and require the Assessing Officer to decide the case de novo.”
Aggrieved by the dismissal of the appeal by the CIT(A), the assessee is in appeal before us.
The Ld.AR submitted that the validity of the proceedings are contended basically on two grounds i.e. Non issuing of notice u/s143(2) and not providing sufficient time to make submissions. The Ld AR further submitted that the objections about the non issuing of notice u/s. 143(2) were raised before the AO vide letter dated 28/03/2016 and 30/03/2016 and hence the provisions of section 292BB of the Act are not applicable as per the proviso to the said section. The Ld AR also submitted that contention of the department about no acknowledgment or Thappal seal in the above letter is something beyond the control of the assessee and hence the same cannot be held against the assessee in the interest of law and principles of natural justice
The Ld.DR made detailed written submission which is reproduced below “(i) Though the proof of service of notice is not readily available, it cannot be said that the notice was not served. As per system generated trail, notice is generated and date of hearing is given. During the course of hearing the Id. AR argued that such trail will he there for all notices. However it is to be noted that, the format and suhject matter of notice will he system generated. Default date of hearing will generally be 15 days. But, in this case, the notice is dated 03/09/2014 and hearing is fixed on 12/09/2014 i.e., after 9 days of the date of notice. Therefore, it is clear that there is intervention by AO, and the date of hearing is fixed by the AO and the same is not system generated.
(ii) AO in his order has clearly mentioned that the Notice u/s 143(2) dtd. 03/09/2014 was issued and served.
(iii) There is proof of generation of notice in the system which is placed in Page 4 of 9, Para 4.2 of CIT(A)'s order.
(iv) There are two order sheet notings dated 28/3/2016 and 30/03/2016 copy of which are attached with this submission as Annexure —I. In the noting dated 28/3/2016, AR is brought to notice of change of incumbent and he is asked to reconcile the returned income with 26AS as per the information available in AIR. In the second noting dated 30/03/2016, it is mentioned that the AR informed about non disclosure of rental income to the extent of Rs.21,00,000/- in the Return of Income. Further, it is mentioned that the same is to be added and the AR has agreed for the same. The Id. AR has put his valid signature along with date on both the notings.
(v) Very important point to be noted here is that nowhere in the notings or in the assessment order there is mention of any kind of objection raised by the assessee or the AR. There is no mention of any written submission made which is placed on record.
(vi) In view of above, it is clear that, the assessee was in knowledge of the reason for selection of case and he mentioned that rental receipts to the extent of Rs. 21,00,000/- were not offered to tax and agreed for making such addition. Further, the bond paper on which Power of Attorney is given, is dated 24/03/2016. Therefore, the AR's argument that the matter was discussed only on 28/3/2016 is incorrect. All these go to prove that sufficient opportunity was given to assessee as part of natural justice and there is no prejudice caused to the assessee.
(vii) Going by the merits of the case, it is a straight case where it is clear that the assessee has faultered on disclosing his full income. There is no contention on this point. On being brought to notice of the same, he agreed that there was a mistake and he agreed for making addition towards that. At that point of time he has not raised any objections. It is only during the appellate proceedings that the assessee is raising legal ground of non service of notice to take undue advantage of lapse of time to prove the service of notice by way of obtaing the same from postal department or so.
(viii) Since assessee has not made any such objections during the course of assessment proceedings, the case clearly falls under the purview of sec.292BB of the I.T.Act. For ease of reference the section and the proviso are reproduced hereunder:
292BB: Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-- (a) not served upon him, or (b) not served upon him in time, or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.
(ix) The Ld. AR is trying to take shelter under the proviso pleading that he has made an objection of non service of Notice u/s. 143(2) before the AO before completion of the assessment proceedings. However, his contention is not acceptable as there is no proof of making such objection before AO.
(x) Although there are two submissions in the assessment folder now, which are dtd. 28/03/2016 & 30/03/2016 where assessee has raised the point of non-service of Notice u/s 143(2), but both these letters are not having acknowledgement seal/ tappal seal of the Dept. or Office of AO. Even if it is handed over personally during the proceedings there is no signature of the AO accepting the submissions. Further, there is no mention of making of any such written submissions or raising of objections in the two order-sheet notings dtd. 28/03/2016 & 30/03/2016 copy of which are placed as Annexure I. Therefore, it is clear that there is no proof of submissions of objections by the Assessee for non-service of Notice u/s 143(2) made before the AO before completion of assessment proceedings. Hence, it is to be held that assessee has not raised any such objection before the completion of such assessment or reassessment.
(xi) Therefore, the provisions of Proviso to section 292BB of the LT.Act are not applicable to the instant case. After having excluded the applicability of the proviso, the terms of section 292 BB of the I.T.Act are clearly applicable to the instant case.
(xii) Since the Assessee has appeared through AR and the AR has mentioned no objection to make addition of undisclosed rental receipts and has signed order sheet noting, it is to be deemed that the Notice u/s 143(2) was validly served as per provisions of Section 292 BB of the I.T.Act. Further the words used in Section 292BB are '... and such Assessee shall be precluded from taking any objection in any proceeding or enquiry under this Act that the Notice was not served upon him or not served upon him....
(xiii) In view of the above facts, since there is no proof of making objections before the completion of the assessment proceedings the Assessee is precluded from making such objections before CIT(A) and ITAT. Therefore, the objections of the Assessee with regard to the non-service of Notice u/s 143(2) are not be considered
We have heard the rival submissions and perused the materials on record. From the perusal of the materials we notice that there is a system generated audit trail evidencing that that the notice u/s.143(2) is generated fixing the date of hearing on 12/09/2014. The assessee during the course of hearing had admitted the error of omission and agreed to the addition of the amount of Rs.21 lakhs to the income of the assessee and also has paid tax on the same. The argument of the Ld DR that there is no noting or mention in the assessment about any objections raised by the assessee about non issue of notice u/s. 143(2) and that in the order sheet signed by the representative agreeing to the addition made, there is no objections raised, merits consideration.
Before the Tribunal the Ld AR could not submit any proof for having raised the objections before the completion of the assessment. From the evidences perused there is nothing to prove that the objection were raised before the AO for non issue of notice u/s.143(2) to take shelter under proviso to 292BB and that there is no contrary evidence submitted to support the claim that the notice u/s.143(2) was not served on the assessee. Given this, based on the submissions and evidences produced, we are not in a position to allow this appeal on merits. Hence we dismiss the appeal against the assessee.
In the result, the appeal of the assessee is dismissed.